Invest in forestland; dividends impressive


In investments, frequently named categories include stocks, bonds, cash, commodities, REITS, etc. These sectors sometimes rise or fall similarly. They can be somewhat correlated.


A universal suggestion among financial advisors is to diversify. Invest in different categories.


So what about forestland as investment diversification? That, usually, is not in lockstep with other assets.


Stocks, are good over the long haul, returning about 9 percent or so annually. But remember the bear markets of 2000 and 2008 when minus 50 percent traumatized investors.


Bonds are good for diversity, but yielding a pittance now, and cash returns are near zero. Gold has made its run. And oil has been depressed for years.


Forestland has some admirable qualities.


Land in general appreciates over time. I think at least more than inflation. No irrational exuberance here, unless perhaps you see a “muy grande” while inspecting the property. Trees grow, as I remember, perhaps 4 percent annually. As a general rule of thumb in a pine plantation, landowners can expect about $250 per acre for a first thinning, $500 per acre for a second thinning and $1,000 to 1,200 per acre for a final harvest. Of course these values are market dependent.


There are also possibilities of oil and gas revenue.


An important provision of owning your own land is you can recreate on it, check out the birds, hunt, relax, contemplate, etc. Or you can lease all or part out to others for this. Generally hunting leases in Louisiana range from about $5 to $15 per acre per year, but it can vary greatly depending on the property. That usually is enough to pay the taxes, plus. Standing timber, markets, future potential, other income and accessibility are considerations in assessing value.


Forestland has very admirable features that other assets lack. Growing trees sequester carbon, particularly important in an era of concern about emissions of greenhouse gases. That’s going green for real, not just some slogan. Forestland is a living ecosystem, with components you can identify with. Trees, birds and deer are things you care for. Living and breathing land is something you can love. It’s different than data on a screen representing something. Forest landowners don’t anguish over CEOs whose companies are losing money while they make millions a year and sometimes more when they exit with their golden parachute.


The future? Nobody knows. Economic models require evaluation of value of future assets, but precision is impossible. Think of world wars, social disorder, conflicts and change of the world’s order. Think of past discovery of subsurface assets: coal, oil and gas, and their relevance to forestland values. Louisiana’s subsurface mineral laws are relevant. If there is no extraction within 10 years mineral rights revert to the surface landowner. What’s coming down the pike?


What about different markets for wood? Wood is easy to grow.


I bought into investing in forestland and here is my personal experience. I won’t bog readers down with detailed economic data.


Texas: My first land purchase and the only one I have sold. In the late 1970s, I bought 77 acres of worn out farmland and timber for $700 per acre. I covered my cost with timber harvest, hunting leases, payments from the Conservation Reserve Program for 40 acres, and two thinnings from the pine plantation in CRP.


I sold it recently for $